Build credit without Social Security number?
Dear Credit Card Adviser,
My son and his family recently moved to the U.S. after living abroad for 11 years. His wife does not have a Social Security number. Can she qualify for a credit card? Are there other actions she can take to boost her credit history?
This is a trickier question than it seems, with many parts. Let's start with your son's wife, or your daughter-in-law, and discuss how to get her a credit card.
Depending on the creditor, she may or may not need a Social Security number to apply for a credit card. Capital One and Chase require this number on their credit card applications. Discover and Bank of America accept Social Security numbers, but they also will take a taxpayer identification number issued by the Internal Revenue Service.
American Express accepts several forms of identification: Social Security, taxpayer ID, a foreign driver's license or a foreign-issued passport. Citi doesn't require a Social Security number, but applicants who don't have one may be asked to show a government-issued ID at the closest Citi bank branch.
Your daughter-in-law also can be added as an authorized user on many credit cards without an SSN.
Now, let's look at her credit history. Unfortunately, your daughter-in-law's foreign credit history can't be transferred to the U.S. But she can start building one here even though she doesn't have a Social Security number. It's best to have one, though, to ensure her credit information is recorded accurately, says Maxine Sweet, vice president of public education at Experian.
"Name and current address are the minimum requirement, but we strongly encourage the lender to provide the SSN, date of birth and previous address if it was within the last two years," she says. "That additional information can be very important in helping us match the account to the correct consumer."
TransUnion also builds credit histories on individuals without a Social Security number. Equifax didn't respond to emails asking about their minimum identification requirements for a credit report.
Getting a Social Security number isn't easy. Generally, only immigrants OK'd to work in the country by the Department of Homeland Security qualify for an SSN, according to the Social Security Administration website. There are exceptions, so contact the agency for more information.
Now, here's a potential problem you probably didn't anticipate: Your son may have a hard time getting a credit card, too. If your son didn't maintain any open or active U.S.-based credit -- such as a mortgage, credit card or other loan -- while he was abroad, a lender probably won't be able to pull his credit score. He may not even have a U.S. credit file anymore.
A U.S. credit report from Experian, Equifax and TransUnion is based on payment history on mortgages, car loans, student loans, personal loans, credit cards and other loans he got here. If he doesn't have any activity on these types of accounts in the past year or so, his credit report has gone stale, says John Ulzheimer, president of consumer education at SmartCredit.com.
"At that point, the credit report will cease to be scoreable under any credit score criteria," he explains. Credit scoring models need recent activity to calculate a credit score. No activity, no credit score. No credit score, no new credit in most cases.
That's not all. The credit reporting agencies don't maintain credit files indefinitely. By law, negative credit information must fall off credit reports after seven years. Bankruptcies disappear after 10 years. Sounds good, right? But Ulzheimer says credit reporting agencies will eventually drop the good stuff, too. After 11 years, your son's credit history may have vanished.
Your son should see if he has a credit report. If he does, he should give it a thorough read and make sure there aren't any errors. He can pull his credit reports from each of the bureaus for free once every 12 months at AnnualCreditReport.com. If he finds he has little or no credit history, he will need to start building credit again the same way a young adult does: through a secured credit card or as an authorized user.
Secured credit cards require an upfront deposit to act as collateral against the line of credit. The deposit equals the credit limit, and it's placed in a money market account or certificate of deposit while the account is open. Typical deposits run between $300 and $500. The problem is that you need at least six months' worth of activity on the card before a FICO credit score -- the most widely used score out there -- can be created.
This is where you, as a parent, can help out, if you have good credit history. Adding your son (and daughter-in-law) as an authorized user on a credit card (or two) will immediately populate his credit file with the card's payment history. That means he'll have a calculable credit score, too. He'll be able to apply for credit in his own name and build from there. Good luck to the whole family!
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